Thursday 31 December 2015

Chelmsford City centre property market outperforms the Chelmer Village housing market by 10%

Following a discussion with a local landlord who has been reading the Chelmsford Property blog and wanted to know where he should be buying his next property, he has seen lots of nice properties in the City centre on roads such as South Primrose Hill, Rectory Lane & Rainsford Road, but he owns a couple in Chelmer Village already, so wanted to know what the benefit would be of buying in the City centre, if any at all. I did a bit of research into the matter for him and these were my findings.

The average price of 2 bed house in Chelmsford City centre is £236,479. When you consider the rents that are achieved in this area are an average of £975 pm, this gives us a yield of 4.9% per year. So is Chelmsford City centre the best investment? Well, in the Chelmer Village development, the average value of a property is £249,356 (for a 2 bed) and the average rent is £926 pm, giving a lower yield of 4.4% per year, making the yield/ return in Chelmer Village 10% less than property in the City centre, so surely City centre properties are the best investment, right?

This, however, is a great example of annual yield/return not being the only factor when choosing an investment property, as you should also consider how much the value of the property goes up in the long term. In the last 11 years, property values have only risen on average by 15% in the City Centre for 2 bedroom houses, which isn’t too bad considering there was the 2008 property crash). However, average property values for 2 beds on the Chelmer Village development have risen on average by 34% in the same time frame!

So, if you are invested in Chelmsford property, do you want capital value or yield?  If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market, please come and see me at our office in Duke Street, opposite County Hall in Chelmsford.

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